The radical 1945 Labour government built the welfare state to address the five giant evils that William Beveridge saw in Britain’s industrial society. The next Labour government needs to build a new welfare state that moves beyond Beveridge’s five giants to address the needs of a post-industrial society. A new welfare state should be front and centre of a progressive public policy agenda, one that looks to the needs of 2020, rather than resurrecting policies from 1980. Looking at social need and economic benefit, universal public childcare should be part of 21st century British welfare state.
Equal pay day on 6 November highlighted the shameful gender pay gap that still exists between men and women. Yet there is also an employment gap: only 67 per cent of working age women are in employment, compared to 76.8 per cent of men. Women have begun to break through the ‘glass ceiling’ into senior management positions only to fall off the ‘glass cliff’, unable to remain in such positions due to factors including childcare challenge their work-life balance. In the United States, Michelle Flournoy resigned as chief policy adviser to Leon Panetta – the highest position ever held by woman in the Pentagon – citing difficulties looking after her family. For the 26 per cent of British families headed by lone parents, childcare is the primary barrier to employment. For many lone mothers in particular, employment is not just a normative issue about gender equality but a necessity for supporting a family. Supporting employment requires an active social policy that helps take mothers from cradle to wage.
Public policy should facilitate rising female employment. Not only does this advance gender equality by increasing opportunity for women and female autonomy, but it is good for the economy. The Organisation for Economic Cooperation and Development’s 2004 report into female labour force participation identified childcare policy as the joint biggest determinant of female employment along with parental leave. Having more women in the workplace has been shown to enhance performance. The effect of increasing the labour force and the talent pool, lowering workplace absenteeism and creating paid jobs in childcare, can boost economic growth at a time when productivity gains are slow. The healthcare demands of an aging population are putting greater fiscal demands on our increasingly stretched health service and reducing the relative size of the working age population. Facilitating higher female employment will increase the size of the labour force while boosting the tax revenues needed to support the National Health Service.
The last Labour government made good progress in adapting the welfare state to meet the needs of a post-industrial society: Sure Start, child tax credits and the New Deal for lone parents. However, public policy can go further and be more effective. IPPR’s Childcare: A national priority? study calculates that universal childcare would on average provide the Treasury with £20,050 over four years, in terms of extra tax revenue minus the cost of childcare, for every mother who returns to work after maternity leave. Looking at trends across OECD countries and controlling for different types of spending, my research has found that spending on childcare services, rather than means-tested subsidies or tax breaks, for under-threes is the most cost-efficient childcare policy to facilitate female employment. Furthermore, in the United Kingdom an increase in public spending on family services of 1.52 per cent of GDP would be expected to get the female employment rate equal to the male employment rate, bringing nearly two million more women into employment. Even using a conservative estimation based on IPPR’s figures, this investment would provide a net gain to the Treasury of nearly £28bn over four years.
Expanding public childcare services, rather than tax breaks or subsidies, should be the focus of public policy. Investing in public childcare does not just tackle the problem of gender inequality which persists into the 21st century, but provides a fairer way of tackling the fiscal pressures the UK faces. Along with the integration of health and social care, childcare policy should be part of an ambitious project of reforming the welfare state so that it better caters to the needs of society while making it more financially sustainable in the long term. Reform of the welfare state should be at the heart of a progressive Labour policy agenda that can unite our party and make our country fairer.
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